How much tax have you overpaid?
Filed under: Savings & ISAs
Need to know: Savings
A recent Parliamentary report noted its concern that around 2.4 million pensioners could be paying too much tax on their savings each year.
It's not the case that the government takes the extra 10% and you can't get it back, you can –through a tax rebate. But to do this you have to negotiate the Self Assessment tax form and more fundamentally, know that the government has taken too much of your money in the first place.
The main problem with the government siphoning off too much of your money into their coffers is that many people don't even realise, there is an unwavering belief that we will be charged the right amount and your bank and HMRC will work it out between them without you having to get involved.
It's true that you shouldn't have to fill out a form to reclaim your own money back (and you can bet your bottom dollar that the government won't pay you the interest that you lost out on while it had hold of your cash).
However, it does raise another point about how little we know about our own tax affairs, and the need to be more tax efficient.
Of course if you have complex tax affairs then you're better off employing a tax expert but there are lots of things we can all do to save ourselves some money.
Figures from unbiased.co.uk reveal the average person will give away £421 to the taxman this year by failing to make use of all the tax reliefs on offer.
Britons miss out on £12.6 billion in total each year by ignoring their tax affairs. Last year we failed to claim £7.26 billion of tax credits, including child tax credits, working tax credits and pension credits – that's essentially free money that we haven't, as a nation, claimed.
We're also failing to use up all our tax-free allowances, such as ISA and capital gains tax allowances.
The government needs to sort its systems out, but it seems the great British public also need to get their own tax affairs in order.